Network Goods

question 206

Multiple Choice

Network goods

• A) are a new category of goods.
• B) depend on the existence of a network to exist.
• C) are not goods at all, but services.
• D) depend on the government to exist.

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Definitions:

Direct Material

Raw materials that can be physically and directly associated with the finished product during the manufacturing process.

Indirect Material

Materials used in the production process but not directly traceable to a finished product, such as lubricants for machinery.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the proportion of fixed versus variable costs a company has.

Safety Margin

The difference between the actual sales and the break-even point; it measures the amount by which sales can drop before a business incurs a loss.